A blog of the NYU Colloquium on Market Institutions and the Leipzig Colloquium on the Market Order

Lessons from the Uber-de Blasio Showdown

Earlier this summer, de Blasio attempted to cap the number of Uber and other ride-sharing drivers in New York City. Although he ended up dropping the proposal, the event itself serves as a wonderful pedagogical illustration of public choice insights. Here’s an excerpt from my op-ed on this:

What can we learn from this Uber fight and public choice economics? We need to have a more practical understanding of politics rather than indulging in a romantic notion that all policies intend to help residents or consumers. We often get bad policies because of self-interested exchanges between politicians and special interest groups. We shouldn’t fall head over heels every time politicians tell us they support a particular policy in order to “help the people.” Sometimes that’s just a façade for what is going on behind closed doors. So when politicians tell us they want to limit ride-sharing to “protect riders,” residents should take this public justification with caution and not immediately assume that they’re doing it out of the goodness of their hearts.

One thought on “Lessons from the Uber-de Blasio Showdown”

Essentially, the politicians will have to balance between the interest of the public and those of special interest groups. Mayor de Blasio had to backtrack on his decision to limit the number of taxis entering New York City, after a miscalculation of the strength of Uber taxis; especially the fact that it could mobilize huge number of people against the proposed policy. Ordinarily, with impending elections, politicians would be more focused on actions that win them elections rather than provision of public good.

When it comes to decisions around public good, we are always facing a competition between the interest of the public and those of the lobbyist. Lobbyist have always tended to win because they are few and more organized. Mayor de Blasio actions may have been driven by the taxis; whose services are poor in the area, and would wish to lock out Uber. However, as it happens once in a while, citizens can also mobilize themselves and force their leader to take action which may not be popular with the lobbyist. This is because the lobbyists may bring in the campaign money, but the politicians need votes to ascend to power, and those votes are with the people. Being hugely unpopular is not what any politician would want.

Hence, even though the public may largely be seen as lacking the commitment of the lobbyist to push through their interest, as they are many and their diversity is a stumbling block to unity, what needs to be remembered is that the same public have a ‘tipping point’, beyond which circumstances force them to organize and safeguard their interests from the lobbyists an politicians.